Crime Information and Communication Hub

How crime hurts new tech businesses in South Africa

The high cost associated with crime in South Africa is one of the major reasons why many new computer businesses fail. This is according to Esquire CEO Mahomed Cassim.

Cassim said Esquire has seen a significant increase in new resellers from brick and mortar stores over the last few years.

“However, crimes such as shoplifting and internal theft have a major impact on business, and are a big factor as to why so many brick and mortar start-ups fail in the first few of years of trading,” said Cassim.

Cassim said that failure to take solid security precautions invites crime into a business, so it’s not an area where you can afford to cut corners.

“Direct losses and security costs reduce profits and divert funds that could have been invested in the business infrastructure.”

The risk of cash payments

While there are multiple safe payment options – like EFT, credit cards, and mobile payments – many South Africans still use cash to buy goods.

“Most businesses still accept cash as payment, because payment methods such as credit and debit cards are still relatively expensive,” said Cassim.

However, manual cash-handling costs far outweigh the benefits, and also pose significant challenges.

This includes staff resources that need to replenish and reconcile cash, the high cost of transporting money, and cash deposit fees that banks charge for depositing funds into bank accounts.

Apart from the risks and costs associated with cash payments, businesses also have to deal with merchandise loss by means of shoplifting and internal theft.

“Other forms of merchandise loss include swapping of higher-spec items into lower-spec boxes, or swapping price labels of different items.”

Cassim said consumers are hurt the most through crime, because the cost of crime is ultimately passed on to them.

“Businesses need to raise their prices to cover their losses, and spend considerable resources implementing security technologies to prevent shoplifting.”